China-U.S. Trade Agreement Welcome News
US RICE PRODUCERS
KATY, TEXAS
President Trump’s recent trade agreement with China represents a major rebalancing of agricultural trade that will ripple across U.S. farm economics. Summarizing the announcement from The White House Fact Sheet on Economic and Trade Talks with China, the country has suspended its retaliatory tariffs for the first time since 2018 and pledged to purchase more than 25 million metric tons of U.S. soybeans annually through 2028. China is also reopening its market to sorghum, beef, pork, and other American farm products. These commitments restore access to a market that had largely been shut off for years, removing trade barriers that punished U.S. producers and distorted global commodity flows. By easing retaliatory duties and non-tariff restrictions, this deal immediately strengthens demand for U.S. soybeans – helping rebalance global feed and oilseed markets and restoring confidence in American agricultural exports.
For U.S. rice farmers, the direct benefit may not come from increased rice sales to China, but from the indirect tightening of U.S. acreage and supply. As soybean prices rise with renewed Chinese demand, many Delta and Mid-South growers are likely to shift acreage back toward soybeans, which reduces total U.S. long-grain rice plantings in future crop years. With fewer acres in production, the rice balance sheet will tighten, easing the current oversupply that’s driving prices down. In effect, this trade shift could do what domestic policy hasn’t: raise rice prices by shrinking available supply. Even if soybeans capture the immediate spotlight, the downstream impact is a healthier long-grain market for those who stay in rice – higher prices, better basis, and more breathing room for U.S. producers to recover profitability.
With no government sales information to report on account of the shutdown, we can’t provide empirical data to inform our export sales numbers. We are therefore intimating details from anecdotal conversations among industry members. Even those aren’t positive, as Iraq business has yet to ramp up until an MOU is signed, most likely in the first part of 2026. Exports to Haiti are consistent but remain in jeopardy because of a quality Pakistani crop. Paddy sales are also slow as the MERCOSUR has gobbled up much of our historical demand. Later this month we will have a good indication of the on-going Mercosur spring planting and carry-over stock situation, therefore the first real outlook for 2026 for these four rice-exporting countries.
As mills get deeper into the crop, it’s becoming clear that milling yields are at least 5% off, but likely not 10%. This means that the byproduct supply will increase and put even more pressure on overall returns back to the farmer, thus making ARC/PLC payments all but guaranteed for the coming crop cycle. The tough part is, without further government funding in the form of emergency payments, there is simply no way for rice to pencil in the current environment.
To exacerbate the problem, India is reporting another bumper crop, that will continue to put pressure on the Asian price matrix. This in turn will put downward pressure on prices in the Western Hemisphere. To look at how the spread has been squeezed in the last year alone, the average of Asian rice (Thai/Viet/Indian) is 45% cheaper than Western rice (USA/Brazil/Uruguay), whereas it was only 38% cheaper a year ago. All of this spells more need for the government to ensure its policies regarding national security includes food security, of which rice is paramount. ∆
US RICE PRODUCERS